If your financial situation changes during Chapter 13 bankruptcy, you may be able to modify your repayment plan. Job loss, lower income, medical bills or higher living expenses can make the original plan hard to follow.
When can you change a plan?
Under federal bankruptcy law, you can generally modify a Chapter 13 plan after confirmation and before completing the plan. A modification may increase or reduce payments or change how long you have to pay. Common reasons for a change include:
- Lost income or reduced work hours
- Unexpected medical costs
- Missed plan payments
- Other major financial changes
A hardship does not automatically mean the court will approve a change. The new plan still must meet bankruptcy rules.
How does the process work?
The exact process can vary by court. In Texas, you usually must follow both federal law and local court rules. The process may include:
- Reviewing your income and expenses
- Preparing a motion to explain why the plan should change
- Filing updated financial schedules if needed
- Notifying the trustee and other required parties
- Getting court approval
Do not assume you can change your payment amount just by telling the trustee. You should follow the proper legal process.
When should you ask?
You may request a modification after the court confirms the plan and before you complete it. But if you wait too long and miss payments, your case could face more problems.
How to move forward
A Chapter 13 modification may help if your finances change during bankruptcy. Because the rules can be technical, it is wise to review your options early and avoid waiting until missed payments build up.